Structured frameworks add standards and challenges to ESG reporting, says Rockwell Automation's SVP and chief people and legal officer

• Rebecca House, Rockwell Automation's SVP and chief and legal officer, joined the industrial automation leader in 2017.
• The company's corporate responsibility report, which began publishing annually over 15 years ago, evolved into an ESG-focused sustainability report in 2020.
• Rockwell Automation's 2021 Report includes the company's first TCFD (Task Force on Climate-Related Disclosures Report), adding to its SASB and GRI disclosures.

For Milwaukee, Wisconsin's Rockwell Automation, a Fortune 500 industrial automation company with reported 2021 global sales of $7 billion, ESG reporting has been "more of an evolution than a revolution," Becky House, senior vice president and chief people and legal officer, told Insider.

More than 15 years ago, she explained, the company began producing and publishing what was then called a corporate responsibility report. Two years ago, that evolved into an ESG/sustainability report that reflects market trends and expectations, focused on three key pillars – fostering a sustainable company, customers, and communities.

In addition to the title change, Rockwell partnered with an outside consultant to do a materiality assessment, which is the process of identifying, refining, and assessing potential ESG issues. "We took the opportunity to kick the tires and talk to a diverse set of stakeholders – customers, employees, distribution partners, investors, and suppliers – to understand what's important to them across this wide-ranging set of possible ESG focus areas," she said.

The company also focused on different structured frameworks that offer industry standards and benchmarks around ESG reporting. That included a SASB (Sustainability Accounting Standards Board) report, and in 2020 Rockwell Automation published their first GRI (Global Reporting Initiative) report. In 2021, the ESG report also included the company's first TCFD (Task Force on Climate-Related Disclosures) report. In addition, there are organizations the industry calls "raters and rankers," that look at company ESG disclosures and rank them across diverse sets of metrics. For example, Rockwell's stakeholders pay attention to Morgan Stanley Capital International (MSCI) and Sustainalytics.

"We look at benchmarks around reporting that resonate and give an apples-to-apples comparison," House explained. "We structure our sustainability report to tell our story in a strategic way, but also meet the market demand for some standardized reporting." As the U.S. Securities and Exchange Commission (SEC) shows signs it may soon adopt specific ESG disclosure requirements, the expectation for "tangible, auditable, measurable results has increased, around everything from energy and emissions management and responsible supply chain to ethics, compliance, product quality, DE&I, and health and safety, " she added.

However, the big challenge around having so many standards, frameworks, and disclosure expectations is the sheer diversity of approaches, as well as the fact that there is not one right way to measure, House said. "The industry has pretty well-established ways to measure safety, health, and safety of your employee base, or how do you look at the diversity of your workforce. But when it comes to environmental disclosures – Scope 1, Scope 2, and Scope 3 emissions – there are multiple ways to measure."

In addition, tracking, reporting, and understanding the data around ESG and turning it into meaningful results is a challenge. "There are different systems and rubrics you need to apply," she said. "It's striking to me…there are lists that are pages long of different potential reporting and metrics, and raters and rankers who want to prioritize one or the other, so how we're graded by one can be materially different from another even though they have access to the same disclosures."

Ultimately, Rockwell's 2021 Sustainability Report focuses on the industry it serves and the company's priorities, including a goal to be carbon neutral (Scopes 1 & 2) by 2030; an expansion of the company's corporate sustainability team and function; and the use of Rockwell technologies and expertise to drive sustainable innovations in industries including solar, steel, and packaging.

"We are all about making our customers more sustainable and productive, so even as we look at our product and service offerings, we look at how we can make our transparency efforts self-evident to our customers, as well as how our offerings help them achieve their sustainability goals," she explained. "Where is the energy reduction? How can we help them with their carbon footprint?"

In a global business like Rockwell Automation, House emphasized that ESG is a key business priority. "It's not just a focus on sustainability because it's a good thing for the whole world, but it also is part of the business imperative," she said. "It's embedded within what we're doing, our product plans, service offerings and approach to the marketplace."